Pakistan is in talks with China to receive $2 billion deposits following the ‘polite refusal’ by United Arab Emirates to grant Pakistan over $3 billion oil on deferred payment. The possibility is that the deal with China will be finalized by the end of this month.
It is anticipated that China will grant $2 billion to Pakistan. In the current fiscal year Pakistan will have to make huge repayments on foreign loans and bonds. It is important that dollar inflows are continued to improve the situation of the foreign currency reserves held by the State Bank of Pakistan (SBP).
A top government official said, “We will give you surprise,” when a reporter asked about the 6 to 7% on proposed China’s deposits.
China earlier linked the $2 billion deposits with the Shanghai Interbank Offered Rates (SHIBOR). China wanted to provide the $2 billion in Yuan currency that would be then converted to US dollar.
According to official sources, “Any deposit facility less than 5 percent will be wonderful for the country at this juncture.”
After the general elections, 2018 China did deposit $2 billion to SBP. Now coming to the UAE not granting $3 billion to Pakistan, it must be clear that there was no written commitment by UAE.
The sources claimed, “There was no written agreement on oil facility on deferred payment with the UAE.”
The reasons for UAE’s polite refusal is unknown but some believe that Pakistan’s closing relations with Qatar can be one of the reason.